Employers Cannot Restrict Wages to Payroll Cards: CFPB

The CFPB published a bulletin today reminding employers that they cannot offer their employees only reloadable payroll cards as a means of collecting their wages.

A controversy arose earlier this year when a McDonald's Restaurant employee in Pennsylvania was told she could only be paid by payroll card and not through direct deposit to her credit union account.rd

“Employees must have options when it comes to how they receive their wages,” said CFPB Director Richard Cordray. “Today’s release warns employers that they cannot mandate that their employees receive wages on a payroll card. And for those employees who choose to receive wages on a payroll card, they are entitled to certain federal protections.”

The CFPB reported having reports of employers, particularly in the retail and food service industries, distributing wages solely through payroll cards. Federal law, however, prohibits employers from mandating that employees receive wages exclusively on a payroll card, the agency said.

Some employees receiving wages on employer-sponsored payroll cards have complained of unexpected fees for activities such as ATM use, teller withdrawals, and checking the balance of a card, CFPB added.